Homeowners insurance is a vital protection that homeowners should consider investing in to safeguard their property, possessions, and financial well-being. There are several types of homeowners insurance policies available, each offering different levels of coverage and protection. Understanding the various types of homeowners insurance can help you choose the best policy that suits your needs and provides the necessary peace of mind in the event of damage or loss to your home.
Types of Homeowners Insurance
These are the several types of home insurance policies that you'll need to know to select the right plan for you and your home.
HO-1: Basic Form (Basic Homeowners Coverage)
An HO-1 homeowners insurance policy is the most basic type of homeowners insurance policy. It is a bare-bones policy that only covers the dwelling, and it is only covered for named perils. This coverage is best for standalone homes and owner-occupied homes.
What it covers:
- Fire/lightning
- Wind/hail
- Explosions
- Riots or civil commotions
- Damage from vehicles
- Damage from aircrafts
- Smoke
- Thefts
- Vandalism/malicious mischief
- Volcanic eruptions
What it does not cover:
- Open perils (all peril coverage)
- Floods
- Earthquakes
- Personal property
HO-2: Broad Form (Named Perils Homeowner Coverage)
An HO-2 homeowners policy is also a basic policy that covers personal property in addition to dwelling coverage. This form only covers the dwelling and personal property for certain named perils. It covers more named perils than an HO-1 policy. You should consider this form if you have a standalone dwelling or an owner-occupied dwelling.
What it commonly covers:
- The 10 named perils covered under HO-1
- Falling objects
- Weight of ice, snow, or sleet
- Accidental discharge or overflow of water or streams
- Sudden and accidental cracking or bulging of appliances used to service the building
- Freezing
- Sudden and accidental electrical damages from an artificial current
What it does not cover:
- Open perils (all-risk coverage)
HO-3: Special Form (Open Perils Homeowners Coverage)
An HO-3 homeowners policy provides coverage for damages to your home and personal belongings caused by all risks, except for those specifically excluded in the policy. This means that unless a peril is specifically listed as an exclusion, it is covered under HO-3 policy. This type of coverage is designed for single and multi-family dwellings.
What it covers:
- All risks except those specifically excluded for the dwelling at replacement cost
- All risks except those specifically excluded for personal property at actual cash value
What it does not cover:
- Earth movements
- Ordinances or laws
- Neglect
- Wars
- Nuclear hazards
- Intentional losses
- Government actions
- Collapses
- Mold, fungus, or wet rot
- Mechanical breakdowns
- Smog, rust, corrosions
- Discharge, dispersal, seepage of pollutants
- Settling, shrinking, bulging, or expanding
- Birds, vermin, rodents, insects
- Animals owned by the insured
- Water damage
- Power failure
- Thefts due to dwelling under construction
- Wear and tear, deterioration
HO-4: Contents Broad Form (Tenant Insurance Coverage)
An HO-4 insurance policy is designed for apartment or home renters. It provides coverage for personal belongings within a rented property, such as furniture, electronics, clothing, and other possessions in case they are damaged, stolen, or lost due to covered events like fire or theft. This type of insurance also typically includes liability coverage in case someone is injured on the rented premises and the renter is found legally responsible.
What it covers:
- The 10 named perils covered under HO1
- Weight of ice, snow, or sleet
- Falling objects
- Accidental discharge of water or overflow of water or streams
- Freezing
- Sudden and accidental cracking or bulging of appliances used to service the building
- Sudden and accidental electrical damages from an artificial current
What it does not cover:
- Earthquakes
- Floods
- Structural damages
HO-5: Comprehensive Form (Comprehensive Homeowners Coverage)
With an HO-5 policy, you can get extensive coverage for a wider range of perils compared to other standard homeowners insurance policies. This includes covering the dwelling, personal property, and liability protection for a broader list of risks such as accidental damage, theft, and even mysterious disappearance of items. It offers a higher level of protection dwellings such as single-family homes, duplexes and townhomes and is typically more expensive.
What it covers:
- All risks except those specifically excluded for the dwelling at replacement cost
- All risks except those specifically excluded for personal property at replacement cost
What it does not cover:
- Earth movements
- Ordinances or laws
- Water damage from floods
- Sewer backup
- Water seepage
HO-6: Condo Insurance or Unit-Owners Form (Condominium Coverage)
If you have a condo unit, you should get an HO-6 insurance policy. It providers coverage for the interior of the condo unit, personal belongings, liability protection, and improvements or upgrades made to the unit. It is essential if you want to protect your unit in case of unexpected events like theft, fire or natural disasters.
What it covers:
- Interior damages (depending on the covenants, either studs inward, wallboard inward, or paint/paper inward)
- Improvements and betterments
- Additions and alterations
- Loss assessments
- The 10 named perils covered under HO-1
- Weight of ice, snow, or sleet
- Accidental discharge of water or overflow from water or streams
- Sudden and accidental cracking or bulging of appliances used to service the building
- Freezing
- Sudden and accidental electrical damages from an artificial current
What it does not cover:
- The exterior of the building
- Common properties
- Exclusions listed on the policy
HO-7: Mobile Home Form (Mobile Home or Manufactured Home Coverage)
Do you own a mobile home? An HO-7 insurance policy is right for you. This type of policy offers protection for the structure of your mobile home, personal belongings inside, and liability coverage. This policy is best for single or double-wide mobile homes, manufactured homes, mobile home trailers, recreational vehicles and modular homes.
What it covers:
- All risks except those specifically excluded for the dwelling at replacement cost
- Named perils for personal property at actual cash value
What it does not cover:
- Floods
- Hurricanes
- Mold
- Vandalism to vacant dwellings
- Wear and tear
- Property damage caused by pets
- Earthquakes
- Enforcement of building codes and building regulations
- Intentional acts
- Neglect
- Government acts
HO-8: Modified Coverage Form (Modified Home Coverage)
An HO-8 insurance policy provides coverage for older homes (older than 40 years) or homes with unique characteristics that may not qualify for standard insurance policies. This form typically offers actual cash value coverage for the structure of the home, meaning that depreciation is factored into the payout for any claims. It is a cost-effective option for homeowners with older homes who may not need or qualify for full replacement cost coverage.
What it covers:
- Aircrafts
- Civil unrest and riots
- Explosions
- Thefts
- Wind and hail
- Fire and lightning
- Smoke
- Vehicles
- Vandalism and malicious mischief
- Volcanic eruptions
What it does not cover:
- Earthquakes
- Falling objects
- Flood damage
- Water damage
- Winter-related damages
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Choosing the Right Type of Home Insurance
Choosing the right type of homeowners insurance is crucial for protecting your investment and ensuring that you are financially secure in the event of unexpected circumstances like natural disasters, theft, or accidents.
Consider factors such as coverage limits, deductibles, replacement cost, and additional coverage options when selecting a policy that best fits your needs and budget. It is important to carefully review and compare different quotes from various insurance providers to make an informed decision.
Remember that investing in a right homeowners insurance policy is a proactive way to safeguard your property and assets, providing you with the reassurance that you are prepared for whatever life may bring.
Frequently Asked Questions
How can I determine the right type of homeowners insurance policy for me?
It’s important to consider factors such as your home’s location, value, and your specific coverage needs when choosing a homeowners insurance policy. Consulting with an insurance agent or broker can help you determine the right type of policy for your situation.
Do homeowners insurance policies cover natural disasters?
Most homeowners insurance policies do not automatically cover damage caused by natural disasters such as floods, earthquakes, and hurricanes. Additional coverage may need to be purchased separately or added as a rider to the policy.
Are personal belongings covered under homeowners insurance?
Yes, most homeowners insurance policies include coverage for personal belongings such as furniture, clothing, and electronics. However, there are limits on coverage for certain items like jewelry and collectibles.